For most students, college is a time of both in-depth learning and the application of practical life lessons. Yet, there’s one important lesson most students won’t find on the curriculum: money management.
Given the impact money has on a college student’s way of life, it’s essential for parents to provide a crash course in financials. To assist in this task, the experts at Communityforce put together this list, breaking down the tips students should know to pave the way to an improved relationship with money.
1. Show your child how to budget
At the root of all money management lies the all-important budget. By showing your children how to budget, you’re enabling them to be the sole caretaker of their finances and teaching them how to live responsibly. As Nathaniel Sillian from Visa, Inc. pointed out, budgeting can be done in a variety of ways: from traditional pen and paper to computer programs or mobile apps. Be sure to help your kids find the method that works best for them.
2. Be mindful about college funding
Lessons in money management can begin well before your child steps on his or her respective college campus. As your student seeks out college funding, explain the differences between various types of aid. You might stress the importance of applying for scholarships and grants that, unlike interest-based loans, have no strings attached.
3. Break down banking and credit card options
Upon establishing financial freedom, your student will likely want to open up his or her own financial accounts. Explain the differences between checking and savings options. At the same time, don’t be shy when it comes to talking about credit cards and their potential for overuse. Ignoring such abuse will make it more likely to happen.
4.Identify the need to live within one’s means
Let your children know that, as college students, they should set the financial tone for their adult lives by living within their means. Stress the importance of foregoing extravagant purchases and, instead, only buying essentials such as groceries. If there are certain items – such as clothing or school supplies – that you as parents are willing to pay for, be sure to make that known as well.
5. Stress the importance of making payments on time
Before taking on a credit card or car payment, students should be aware of the role on-time payments play when it comes to credit worthiness. Introducing them to the world of credit scores and credit tracking will put them in a position to make better short-term decisions and potentially keep them from making a mistake that negatively affects their credit report for years to come.
6. Talk about identify theft
As Nationwide pointed out, college students can be easy targets for identity theft. Consequently, parents should provide students with a list of precautions they can take to keep themselves from being victims.
7. Encourage smart spending
As previously mentioned, the art of budgeting is a vital skill for students to possess. Yet, all the budgeting in the world may not help students who are spending frivolously.
As you show your child how to budget, list some ways he or she can keep spending in control. Such methods might include limiting purchases to a certain percentage of income, utilizing coupons and student discounts, and saving for an emergency fund.
8. Discourage student loan refunds
A number of students look forward to loan refunds at the beginning of every semester. While this might seem like a “free cash” occasion, the reality is these refunds provide money that needs to be paid back – with interest. Talk to your child about the harm in taking on more debt than they need and provide a list of alternative income sources.
9. Touch on ways to earn extra cash
Occasionally, students may find they need additional income to support their lifestyles. While avenues such as loans or revolving credit card debt may seem like quick-fix options, stress the importance of foregoing these paths and opting for sources of sustainable income instead.
Such income providers might include work-study or off-campus jobs. In addition to helping your student find employment resources, talk to him or her about seeking a position that provides additional benefits such as consideration for course schedule or even tuition fee reimbursement.
For more information on financial aid and college planning, please visit Communityforce website!